Skip to content

Kakao Corp Q1 2023: Revenue Growth Amid AI & Healthcare Expansion

Kakao Corp. (KRX: 035720) reported Q1 2023 revenue of KRW 1,740.3 billion ($1.31 billion), up 5% y-o-y but down 2% q-o-q.

The company's operating income fell to KRW 71.1 billion ($53.5 million), down 55% year-over-year and 29% sequentially, with an operating margin of 4.1%.

Source: Kakao

Kakao's platform revenues totaled KRW 964.7 billion ($726 million), while Talk Biz revenues grew 12% YoY to KRW 515.6 billion ($388 million) despite conservative marketing efforts. Portal Biz revenues declined 27% YoY to KRW 83.6 billion ($63 million).

However, Other Platforms revenues grew 18% YoY to KRW 365.6 billion ($275 million), driven by solid performance in Kakao Mobility's taxi, agency, and parking businesses and Kakao Pay payments and financial services.

Content revenues, which include music, media, and games, reached KRW 775.6 billion ($584 million), with music revenues growing 13% year-on-year.

New game releases are expected to impact revenues in Q2 2023.

Kakao plans to invest in infrastructure for stable and continuous service delivery while promoting efficiency in operating expenses.

The company aims to expand investments in artificial intelligence (AI) and healthcare, focusing on building an AI foundation model to ensure leadership in the AI field.

KakaoTalk, the company's flagship messaging app, will be reorganized and upgraded to provide services tailored to each user's purpose and context.

CEO Euntaek Hong expects these improvements to increase user satisfaction and more excellent value for business partners.

Kakao's partnership with SM Entertainment aims to accelerate the realization of Kakao Community's "Beyond Korea" and "Beyond Mobile" visions, focusing on the global distribution and management of music content.

The weak Q1 results were impacted by investments in infrastructure and new businesses, with operating expenses rising 12% year-on-year to KRW 1,692 trillion (USD 1.27 billion).

Outsourced infrastructure costs increased 18% YoY due to heavy investment in data center multiplication for stable services, while amortization expenses increased 15% YoY due to increased CAPEX related to data center construction.

As Kakao continues to invest in its core businesses and expands into AI and healthcare, the company aims to improve user satisfaction and maximize the effectiveness of its business partnerships over the long term.